Mexico

Corruption allegations and revelations cover Mexico’s front pages. Public officials’ penchant for expensive watches, use of government helicopters for personal errands, and a string of expensive houses facilitated by preferred private contractors have incensed not only Mexico’s chattering classes but also the broader public. 2014 opinion polls conducted by the Pew Research Center show corruption ranks second only to crime in citizen concerns. The challenge of corruption goes beyond just a few bad seeds. A 2013 survey found that one third of Mexicans paid a bribe for a public service. Think tank Mexico ¿cómo vamos? estimates corruption reduces gross domestic product by 2 percent. Due to rampant corruption among judges and police (as well as weak investigation and adjudication systems), the World Justice Project’s international rule of law index ranks Mexico seventy-ninth out of ninety-nine countries, comparable to Egypt and Russia. Things may be poised to finally begin changing. After dragging its feet for nearly three years (anti-corruption promises were part of the original Pact for Mexico signed in December 2012), Congress recently passed constitutional reforms that will provide stronger tools to prevent, investigate, and sanction government corruption. The new National Anti-Corruption System targets the political system, requiring more public officials to report their assets and any potential conflicts of interest, strengthening the hand of federal auditors, expanding asset forfeiture laws, and creating a new independent anti-corruption prosecutor. Transparency International’s Mexico chapter has welcomed the reform, and others, including local think tank Instituto Mexicano para la Competitividad, see it as a step in the right direction. Shifts are already underway at the local level, led by Mexico City. Current mayor Miguel Angel Mancera announced an anti-corruption plan in early 2013 with five main aims: (1) professionalize public servants through training and evaluation; (2) strengthen internal controls; (3) simplify administrative processes; (4) engage citizens; and (5) create an anti-corruption website. Since then, the capital has appointed hundreds of new auditors and nearly doubled the number of investigations. It has suspended over 900 public officials and recovered roughly $9 million in illicit funds. The 21 million person megalopolis now has a citizen advisory council to supervise anti-corruption efforts, made up of business and non-profit executives, academics, and lawyers. And it “names and shames” sanctioned officials and disqualified suppliers through publicly available lists. In New York last week, Mancera signed on with the NGO Open Contracting Partnership (OCP) to become their first city partner to create an online portal opening up the capital city’s public contracts to citizen scrutiny. In their infancy, these reforms have yet to prove themselves, and if they can change the status quo. Mexico City’s nascent trial shows some promise. If Mancera can show visible anti-graft results in the capital city, it could prove a savvy political platform for the 2018 presidential election. This blog has been reposted from CFR’s Latin America’s Moment blog.

Corruption allegations and revelations cover Mexico’s front pages. Public officials’ penchant for expensive watches, use of government helicopters for personal errands, and a string of expensive houses facilitated by preferred private contractors have incensed not only Mexico’s chattering classes but also the broader public. 2014 opinion polls conducted by the Pew Research Center show corruption ranks second only to crime in citizen concerns. The challenge of corruption goes beyond just a few bad seeds. A 2013 survey found that one third of Mexicans paid a bribe for a public service. Think tank Mexico ¿cómo vamos? estimates corruption reduces gross domestic product by 2 percent. Due to rampant corruption among judges and police (as well as weak investigation and adjudication systems), the World Justice Project’s international rule of law index ranks Mexico seventy-ninth out of ninety-nine countries, comparable to Egypt and Russia. Things may be poised to finally begin changing. After dragging its feet for nearly three years (anti-corruption promises were part of the original Pact for Mexico signed in December 2012), Congress recently passed constitutional reforms that will provide stronger tools to prevent, investigate, and sanction government corruption. The new National Anti-Corruption System targets the political system, requiring more public officials to report their assets and any potential conflicts of interest, strengthening the hand of federal auditors, expanding asset forfeiture laws, and creating a new independent anti-corruption prosecutor. Transparency International’s Mexico chapter has welcomed the reform, and others, including local think tank Instituto Mexicano para la Competitividad, see it as a step in the right direction. Shifts are already underway at the local level, led by Mexico City. Current mayor Miguel Angel Mancera announced an anti-corruption plan in early 2013 with five main aims: (1) professionalize public servants through training and evaluation; (2) strengthen internal controls; (3) simplify administrative processes; (4) engage citizens; and (5) create an anti-corruption website. Since then, the capital has appointed hundreds of new auditors and nearly doubled the number of investigations. It has suspended over 900 public officials and recovered roughly $9 million in illicit funds. The 21 million person megalopolis now has a citizen advisory council to supervise anti-corruption efforts, made up of business and non-profit executives, academics, and lawyers. And it “names and shames” sanctioned officials and disqualified suppliers through publicly available lists. In New York last week, Mancera signed on with the NGO Open Contracting Partnership (OCP) to become their first city partner to create an online portal opening up the capital city’s public contracts to citizen scrutiny. In their infancy, these reforms have yet to prove themselves, and if they can change the status quo. Mexico City’s nascent trial shows some promise. If Mancera can show visible anti-graft results in the capital city, it could prove a savvy political platform for the 2018 presidential election.

The U.S. economic recovery and current strength reflect in large part advanced industries. As other sectors faltered, both employment and output in these businesses grew. In 2013, they employed 12.3 million workers (9 percent of the U.S. workforce), who made on average $90,000 (compared to the U.S. mean of $51,500). These industries generated $2.7 trillion in output (17 percent of U.S. GDP), and indirectly supported an additional 14.3 million jobs. Central to this classification, as developed in a recent Brookings report, is innovation. Participants stand out on two criteria—over 20 percent of their workers are science, technology, engineering, or math (STEM) professionals and all spend $450 or more in R&D per worker. The authors classify some fifty different industries—from aerospace to semiconductors, satellite telecommunications to software publishers—across manufacturing, energy, and services as advanced sectors. These companies—think Boeing, Sirius Satellite Radio, and Google among the thousands of lesser known names—cluster in cities. 70 percent of their jobs are in the 100 largest metropolitan areas. Here they can link to local universities, benefit from a skilled pool of labor, and learn from other nearby firms. Spillovers from this sector help support the broader local economy. Advanced industry supply chains purchase on average $236,000 in goods and services per worker from other businesses (compared to $67,000 in other industries). And the higher salaries and profits feed back through greater tax intakes. Nationally these industries help maintain the U.S. competitive edge—they account for 90 percent of private-sector R&D and 85 percent of all U.S. patents. And they dominate exports, producing 60 cents of every dollar of products sent abroad. Still, when measured against other countries, U.S. advanced industries are losing ground. Jobs and output as a share of GDP are down. This has potential knock on effects for innovation, given the dominance of these businesses in R&D spending, and for future long term economic competitiveness and growth. As with so many other economic challenges today, better education matters. The United States ranks 23rd among developed countries in terms of annual STEM graduates per capita, behind South Korea, Portugal, and Poland. As a result, U.S. advanced industry employers often struggle to find qualified workers. The authors recommend the United States expand early education, improve the quality of schools, and encourage more students to study STEM areas to diminish the deficit. Foreign policy issues too can make a difference, especially with regards to U.S. neighbors. According to the CFR-sponsored Independent Task Force report, North America: Time for a New Focus, stronger ties enhance the United States’ ability to compete in a dynamic and competitive world economy. Export data shows that of the over $1 trillion in advanced manufacturing industries exports (which doesn’t include energy and services), roughly one third head to Canada and Mexico. This number rises to more than half for motor vehicle, railroad, and computer parts. This back and forth between the three nations in the actual manufacturing process reflects a deepening of regional supply chains and the important, if often overlooked, role U.S. neighbors play in supporting “domestic” advanced industries. As Washington debates broader trade, immigration, and security issues, the economic ramifications of these policy choices for our most dynamic industries shouldn’t be forgotten.

During the summer of 2014 tens of thousands of unaccompanied minors surged across the U.S-Mexico border. Over the course of the fiscal year, nearly 70,000—mostly from the Northern Triangle countries of El Salvador, Guatemala, and Honduras—endured brutal and at times even deadly conditions as they made their way to the United States. While most of these children were between the ages of 13 and 17, the fastest growing group was 6 to 12 years old. Of the many factors that influenced their individual decisions, four stand out. U.S. Customs and Border Patrol, “Unaccompanied Alien Children Encountered by Fiscal Year,” 2015. The first is violence. In 2012, the homicide rate in Honduras reached 90 per 100,000—the highest in the world. El Salvador and Guatemala’s homicide rates were 41 and 40 per 100,000, respectively, some of the highest in the hemisphere. Much of this violence is gang related, fueled by robbery, kidnapping, extortion, and drug trafficking. Extreme poverty and inequality also leads children north. Nearly 67 percent of Hondurans, 45 percent of Salvadorans, and 55 percent of Guatemalans live in poverty. One in two Guatemalan children under five suffer from chronic malnutrition, affecting their physical and cognitive development for life. Add in bad schools and few good jobs, there is little reason to stay. The third driving force is family. Over 3 million Central Americans live in the United States, the result of past migration waves. Surveys by Fulbright Scholar Elizabeth Kennedy found that 90 percent of the unaccompanied minors she interviewed from El Salvador had a family member living in the United States. One in three said reuniting with them was the main motivation for leaving home. The importance of family networks is reflected in the disparities in migration paths: despite extreme poverty, few Nicaraguans head to the United States; instead they flock to Costa Rica. Finally, misinformation from client-seeking coyotes pushed many to come. Last spring and summer these traffickers spread rumors that for a limited time United States government would give children amnesty. Pushed out through social media, many families spent upwards of US$8,000 to take advantage of this supposed relaxation in rules. The surge seemed to end as quickly as it began. By September illegal apprehensions were less than half May numbers. One reason for this rapid decline is seasonality. More Central Americans (and Mexicans) come in the spring and summer months when labor needs spike. A second are U.S. efforts to counteract coyotes’ erroneous claims. A US$1 million Spanish-language multi-media “Dangers and Awareness” Campaign ran some 6,500 radio and television advertisements in El Salvador, Honduras, and Guatemala to dispel the falsehoods being spread. Perhaps most importantly, Mexico stepped up its southern border and transit route enforcement; curtailing, for instance, migrants riding the infamous train “The Beast.”In 2014, deportations back to Central America jumped by a third. Still, the United States should prepare for a new influx this spring. Poverty, inequality, and violence continue unabated in the region. And a decent U.S. economy provides opportunities that, for many, outweigh the dangers of the trip. If early trends hold, unaccompanied minors heading north in 2015 will likely be second in number only to the record breaking 2014 flows. To help tackle the root causes, President Obama has asked for over US$1 billion to, in the words of Vice President Joe Biden, support the “difficult reforms and investments required to address the region’s interlocking security, governance and economic challenges.” Skeptics may argue that the billions of dollars spent in the past have little to show. Others may question whether just US$1 billion, divided between three troubled nations, can make a difference. Leadership and political resolve will matter just as much as resources. But without steps to change the calculus, Central America’s youth will continue their treks to the U.S. border.

Last month, I had the pleasure of joining Charlie Rose on his show along with Jorge Castañeda, Mexico’s former foreign minister, and Francisco Goldman, contributor to The New Yorker, to discuss Mexican President Peña Nieto’s meeting with President Obama last month and US-Mexico relations more broadly. Recently aired, you can watch the interview here.

Yesterday, I had the privilege to testify before the House Foreign Affairs Subcommittee on the Western Hemisphere at a hearing titled “The Strategic Importance of the Western Hemisphere: Defining U.S. Interests in the Region.” Also joining me before the subcommittee were Bonnie Glick, senior vice president at Meridian International Center, Evan Ellis, research professor at the U.S. Army War College Strategic Studies Institute, and Eric Farnsworth, vice president of Council of the Americas. Below is an excerpt of my written testimony in which I discussed the strategic importance of North America to U.S. interests and why “Made in North America” should be a foundation for U.S. policy: North America today is a global economic powerhouse, home to almost five hundred million people living in three vibrant democracies. Together the three nations account for over 26 percent of global GDP. Totaling roughly $20 trillion, their combined economies outpace the European Union in economic production. And though the United States makes up the majority of the economic weight (in terms of GDP and as the home to almost a third of the world’s largest companies), both Canada and Mexico rank among the top fifteen largest global economies. North America is also one of the most economically dynamic regions of the world today—the World Bank predicts the region will outperform average global GDP growth in 2015. Because of geography, markets, and the choices of millions of individuals and thousands of companies, North America has become one of the most integrated and interdependent regions in the world. Sharing 7,500 miles of peaceful borders, Canada and Mexico now play vital roles in the United States’ stability, security, and prosperity. It is time to build on past work and advance this partnership to a new stage. If the three North American countries deepen their integration and cooperation, they have the potential to improve the standards of living of their citizens and to shape world affairs for generations to come. Several recent developments make a North American vision particularly attractive. These include advantageous demographics, a shared skilled labor force, and recent economic reforms in Mexico. Today, I want to focus on two particular areas of opportunity: energy and economic competitiveness. You can read the rest of my written testimony here on CFR.org. You can read the written testimonies of my fellow witnesses here on the House Foreign Affairs Committee website. 

For the twenty years since the start of the North American Free Trade Agreement (NAFTA), the United States failed to fulfill its treaty obligations to open its roads and permit safe cross-border services. As part of the original agreement, Mexican trucks were supposed to be able to operate in four U.S. states—Texas, California, New Mexico, and Arizona—by December 1995, and then throughout the continental United States by January 1, 2000. Almost fifteen years later, the vast majority of Mexican trucks are still not allowed on U.S. roads. Mexico retaliated in kind, blocking the movement of U.S. trucks within its borders. In 2009, Mexico also applied retaliatory tariffs on a yearly rotating basis to a variety of U.S. imports, permitted by a favorable 2001 NAFTA dispute settlement panel ruling. To try and comply with the treaty’s obligations while also addressing domestic concerns over road safety, the U.S. government developed a series of pilot programs. President George W. Bush launched the first in 2007, enabling a total of twenty-five Mexican carriers to operate roughly one hundred trucks within the continental United States. These pioneers crossed the border twelve-thousand times in the year-long pilot program (for comparison, some fourteen-thousand thousand trucks cross the U.S. southern border alone each day). Although the program was terminated early (precipitating the retaliatory Mexican tariffs), the U.S. Department of Transportation’s evaluation of the program concluded that the Mexican carriers had better safety records than U.S. carriers. The most recent pilot program began in 2011 and finished this past October. Thirteen Mexican carriers with fifty-five registered trucks crossed the border some twenty-five thousand times during the three year trial period. A joint evaluation by the U.S. Department of Transportation and the Federal Motor Carrier Safety Administration found that Mexican trucks “had safety records equal to or better than the national average for U.S. and Canadian carriers operating in the United States.” Based on these findings, the U.S. Department of Transportation just announced that the pilot program trucks can continue to traverse U.S. roads, and that all Mexican carriers will soon be able to apply to operate in the United States. U.S. Department of Transportation, "North American TransBorder Freight Data: Indexed Data," 2014. This change benefits the United States (and Mexico) in many ways. First, it will end the $2 billion in retaliatory tariffs against U.S. goods sent to Mexico—second in importance only to Canada for U.S. exporters. When fully operational, it will also reduce costs in terms of money, time, fuel, and pollution for thousands of U.S. companies. Approximately two-thirds of U.S. annual trade with Mexico—roughly $335 billion a year—goes by road. More broadly, it is a small but important step toward recognizing the importance of North America for America’s future. Facilitating trade will strengthen the economic production platform that increasingly undergirds U.S. competitiveness and economic growth.

The region will hold just two presidential elections this year, choosing new leaders in Guatemala and Argentina. More prevalent will be congressional and local elections. Midterms in Mexico, Venezuela, and Colombia in particular may prove bellwethers for the direction of these three important regional economies. With term limits barring Otto Pérez Molina from running again, Guatemalans will head to the polls in September. The current front-runner is Manuel Baldizón of the Libertad Democrática Renovada (LIDER), returning to the electoral ring to try and avenge his second round defeat by Pérez Molina in 2011. The president’s Partido Patriota (PP) has thrown its support behind former Minister of Communications, Infrastructure, and Housing Alejandro Sinibaldi. Sandra Torres of the Unidad Nacional de la Esperanza (UNE), who divorced former President Álvaro Colom to be constitutionally eligible to run for office, also has significant name recognition and possibilities. Early polls suggest that none of the candidates has the 50 percent needed to avoid a second round. More closely watched, at least from the global financial world hoping to resolve the current debt impasse, will be Argentina’s October presidential elections. President Cristina Kirchner has yet to throw her weight behind any of the precandidates, though most expect her to (grudgingly) endorse Daniel Scioli, current governor of the province of Buenos Aires, who comes from her Frente Peronista para la Victoria (FPV) and is the front-runner in most polls. Other favorites include Sergio Massa, a Kirchner defector and current federal legislator attracting dissident peronist and opposition support behind his candidacy and party, the Frente Renovador. Mauricio Macri represents the one non-peronist in the leading bunch, leveraging his track record as a well-known businessman, former president of the storied Boca Juniors soccer team, and now mayor of Buenos Aires. To win in the first round Scioli would need to convince 45 percent of voters to stick with the FPV (or 40 percent and a 10 percent advantage over the second-place finisher), otherwise he will face a November run-off. Among midterm elections, Mexico’s president Enrique Peña Nieto and his Partido Revolucionario Institucional (PRI) may face significant challenges come July, when the entire lower house, nine governorships, and control of Mexico City’s delegations are up for grabs. The lack of immediate benefits from the recent spate of economic reforms combined with an evolving and deepening political crisis due to several instances of state associated violence and corruption make the PRI vulnerable. The question is whether the fractured PAN and PRD opposition can overcome their own problems to take advantage of their governing rival’s weakness. Colombia will hold regional elections in October that, among other positions, will determine the next mayor of Bogotá—the second most powerful elected office in the country. With well-known leftist Gustavo Petro stepping down, candidates from across the political spectrum have jumped into the race. In polls, the leftist Polo Democrático Alternativo (PDA) leads with Clara López. President Santos’ coalition, the Unidad Nacional, will likely endorse Rafael Pardo of Partido Liberal Colombiano (PLC), while former president Álvaro Uribe is already pushing Francisco Santos of the Centro Democrático (CD). Finally, Venezuelans are scheduled to head to the polls in December to renew all 165 members of its National Assembly. In the face of falling public support—with just 25 percent approving of Maduro’s performance—rising inflation, food and basic good shortages, the government has responded with increasingly authoritarian measures. Opposition leader Leopoldo Lopez has been in pre-trial detention since February and Maria Corina Machado has been recently charged with conspiring to assassinate President Maduro (along with the U.S. Ambassador to Colombia, Kevin Whitaker). Assuming the elections occur as planned, the opposition will have to overcome its own deep historic divisions to do well—a challenge for newly elected executive-secretary of the opposition coalition Democratic Unity (MUD) Jesús Torrealba. If they do, and the Partido Socialisto Unido de Venezuela (PSUV) loses its legislative majority, the stage will be set for the potential recall of Maduro in 2016.  

Geopolitically, U.S. policymakers generally see high oil prices as bad and low oil prices as good for national interests. In a CFR Working Paper I coauthored with Michael Levi and Alexandra Mahler-Haug we find a sustained drop in oil prices will affect at least one of the United States’ closest trading partners and geopolitical allies negatively: Mexico. Modeling the vulnerability of the Mexican federal budget to a range of oil price declines and assessing the different ways the government might react, we found that severe and sustained declines would force major adjustments in taxes, spending, and debt. Here are some major findings from the paper: In response to falling oil prices, Mexico will usually prefer to raise debt rather than boost revenues or cut spending, but will likely not rely only on one tool. A one-year price drop should be straightforward for the Mexican government to cover with new debt—even if oil prices fall by fifty percent or more. Oil prices need to fall below $70 a barrel for an extended period of time for the Mexican budget to come under severe stress. A summary of the paper can be found here, and the full text here: Spillovers From Falling Oil Prices: Risks to Mexico and the United States.  

Nearly two months ago, forty-three student teachers were murdered in Iguala, Guerrero, Mexico. It was later discovered that the city’s corrupt mayor had had the students arrested and then turned over to a local criminal organization. In this piece published last week in Spanish in El Financiero, I lay out what the federal government can and should do to tackle corruption. You can read the piece in English below:  The news in Mexico is moving from bad to worse. The search for forty-three missing student teachers in Iguala, Guerrero ended tragically, with a few remains found in garbage bags dumped in a nearby river. During the desperate search investigators discovered no fewer than eleven other mass graves, holding dozens of poor unnamed souls, many likely subject to the same ruthless lawlessness, as well as the negligence of if not direct abuse by local and state political powers. As potentially worrisome are the allegations over the “White House,” a seven million dollar abode seemingly controlled by the Peña Nietos, but not claimed by the president when he released a list of his assets during the electoral campaign. The house is legally owned by Grupo Higa, whose owner Juan Armando Hinojosa Cantu is close with the president and a beneficiary of a recently awarded—and then quickly cancelled—$3.6 billion contract to build a high speed train between Mexico City and Queretaro, home of Mexico’s expanding aerospace industry. The only way to quell the rising dissatisfaction and unrest in Mexico is to take on, finally, corruption. If the opacity, silence, and fear that enables these abuses continues, Mexico’s economic and global potential will falter and fade. Until these last weeks, government officials seemed to believe that their economic transformation could occur without a more fundamental shift in underlying incentives and practices. That is no longer the case. So what can the federal government do? First, it needs to pass stronger anti-corruption legislation. Tackling corruption was part of the original 2012 political pact between the three main parties. Yet in the press to successfully pass education, telecom, financial, antitrust, and energy reforms, addressing deep-seated governmental dysfunction got lost. Also undone are necessary changes to the juicio de amparo law, which has become a means for the suspected wealthy to ward off charges rather than a protection from true state overreach. Next, the federal and local governments need to invest in earnest in the transition to the new justice system. The initial 2008 reforms gave the government until 2016 to implement the sweeping changes, which introduce oral trials, alter the roles of judges, prosecuting attorneys and defense lawyers, and strengthen due process among other measures. So far, change has been excruciatingly slow. Only in March did the federal government pass a new penal code, setting the ground rules to which Mexico’s thirty-one states now need to conform. A functioning new system that protects the innocent and convicts the guilty will likely require billions of dollars to retrain the nearly forty-thousand current court officials, to revamp the law school curriculums guiding the next generation of lawyers and judges, and to build forensic labs to examine evidence and court rooms to try cases. As Mexico’s citizens await a new anti-corruption agency and a new justice system, they need immediate concrete actions. The attorney general’s office must try and convict prominent wrongdoers. This can start with just a handful of cases, and Mexico’s reporters and other independent investigators have valiantly provided numerous options. Using Mexico’s decade old freedom of information law along with other tools, the press has exposed alleged bad behavior by governors from all three parties, business leaders, union heads, among many others, any of which could be pursued. The government does not have to try and convict them all—a tall order for a transitioning attorney general’s office and justice system more generally. But it does need to demonstrate that those within the Hermes ties and scarf wearing set can end up behind bars: that malfeasance can carry real costs. Finally, the Mexican government needs to engage directly with citizens. In every recent case of progress against crime and violence—Monterrey, Ciudad Juarez, and Tijuana among them—the involvement of local organizations has made the difference. Business owners, social leaders, heads of victims and human rights groups, along with others, partnered with federal authorities, and at times local ones, to demand and create change. And as these cases show, local governments do respond to federal authorities’ lead. A national level openness to cooperation with civil society groups will be as, if not more, important in places such as Guerrero, due to the already weaker economic and social fabric upon which to begin stitching together a functioning rule of law. This Mexican government has yet to do these things, and in particular, to engage directly and extensively with society, creating watchdog organizations and other accountability mechanisms to tie its own, others, and future hands from corrupt acts. But that is what is needed for a different Mexico. This article appears in full on CFR.org by permission of its original publisher.  You can read the piece as it appeared in Spanish on El Financiero here.   

Earlier this month, the Espinosa Yglesias Research Centre (CEEY) launched the English version of its most recent report on social mobility in Mexico. Creating a measure that combines 2011 household assets and occupational status, they find both good and bad news for aspiring Mexicans. For those in the middle, chances of moving up (or down) are somewhat encouraging, as only a quarter will end up in the same economic group as their parents. But on the richer and poorer ends, the chances of intergenerational change are much lower—only one out of every two individuals will lead an economically different life. Espinosa Yglesias Research Centre, “Report on Social Mobility in Mexico: Imagine Your Future,” 2014. Educational mobility is more positive. In fact, Mexico is quite close to the United States, Switzerland, and Ireland in the likelihood that children will go further in school than their parents. Here, Mexico bests Latin American peers such as Colombia, Chile, and Brazil. Espinosa Yglesias Research Centre, “Report on Social Mobility in Mexico: Imagine Your Future,” 2014. The survey also finds significant gender disparities. Overall, women are more mobile than men. But this movement in part reflects workforce discrimination, as women born wealthy are more likely than men to lose their socioeconomic position, hitting the proverbial glass ceiling. Women who begin life at the lowest income levels are less likely to move up compared to their male counterparts. The study shows that educational mobility has increased more quickly than economic mobility. This suggests that the quality of education lags, especially for those starting at an economic disadvantage. Schooling has yet to become the “great equalizer,” as the chances of completing an undergraduate degree are much higher for private school students. Expectations also matter, not unlike the story in the United States, where qualified lower income students often don’t apply, much less finish, degrees at competitive colleges and universities. What can Mexico—and by extension other countries—do? More equitable and effective public education is an important start. Affirmative action and other policies for women, minorities, and the socioeconomically disadvantaged would help as well. More generally, a broader social safety net could counterbalance the intergenerational effects of poverty. The survey shows Mexico has indeed made some progress, but also illuminates how far it has to go.

How much do Canada and Mexico matter for the United States? Here are a few snapshots illustrating the importance of our combined global heft and influence. North American countries are joined by 7,500 miles of land borders, among the longest in the world. Though comprising less than 7 percent of the world’s population, Canada, Mexico and the United States produce nearly a quarter of the world’s GDP—some 20 trillion dollars. Energy North America is the world’s largest biofuel producer, accounting for nearly half of global ethanol and biodiesel production. The United States, Canada, and Mexico produce nearly 20 percent of the world’s oil and 27 percent of the world’s natural gas. Forty-eight natural gas pipelines connect United States, Canada, and Mexico. In 2012, the region invested more than $250 billion in exploration and production of oil and gas, and experts predict that number could grow to half a trillion dollars annually by 2016. In 2013, Mexico sent 85 percent of its crude oil experts north—making Mexico the United States’ third-largest oil supplier, behind only Canada and Saudi Arabia. Economic Competitiveness Over the last 20 years, North American regional trade grew from $300 billion to $1.1 trillion. Nearly half of all North America’s total exports traded between the three neighbors. Mexico and Canada, in fact, sell more than 75 percent of their exports within North America. The value of U.S. exports to Mexico and Canada is twice the value of exports to the European Union, and five times the value of its exports to China. Since NAFTA’s start, regional trade in services rose by nearly 200 percent—to well over $100 billion a year. The People of North America Some thirty-four million Mexicans and Mexican-Americans, and more than three million Canadians and Canadian-Americans live in the United States. Mexicans and Canadians are the largest groups of tourists entering the United States: a combined 34 million visitors each year contribute an estimated $35 billion to the U.S. economy. In recent years, net migration of Mexicans to the United States has dropped to zero. If you would like to learn more, read CFR’s new Independent Task Force: North America: Time for a New Focus.

Today I am pleased to launch CFR’s Independent Task Force on North America. I have been working with co-chairs David H. Petraeus and Robert Zoellick, as well as some twenty other Task Force members and observers, over the past year to better understand the myriad issues facing Canada, the United States, and Mexico, and to make concrete policy recommendations for the U.S. government to strengthen the region. We find that while not always the most urgent of policy issues, North America is as vitally important to the United States’ future. The Task Force focuses on four main areas in North American relations: energy, economic competitiveness, security, and our shared community. It recommends steps to further integrate energy matrices, to bolster economic competitiveness by speeding the movement of goods and services across borders, to work as three nations together when facing common security threats, and to foster the deepening North American community through immigration reforms and joint workforce development. The full report, North America: Time for a New Focus, is available here.

Yesterday, President Enrique Peña Nieto of Mexico joined us at the Council on Foreign Relations as part of the Russel C. Leffingwell Lecture series. In a conversation with Robert Rubin, Co-Chairman of CFR, President Peña Nieto discussed the progress of the reforms initiated under his administration and current developments in his country. You can watch a recording of the event here.